How are Canadians using their gas savings?

Lower gas prices are helping Canadians save hundreds of dollars at the pumps, but the majority aren’t doing anything with the extra cash, a new survey shows.

A recent GfK poll shows 58 per cent of Canadian drivers haven’t changed their spending or savings habits despite the roughly 40-per-cent drop in gas prices in recent months.

Only 19 per cent are socking the extra money into savings, while 15 per cent say they’re buying more gas and 9 per cent are driving more often.

The results don’t bode well for the Canadian economy and predictions the money saved will fuel consumer spending. They also don’t offer much hope that Canadians are working harder on reducing their growing debts.

“Although falling gas prices are putting a good deal more cash in Canadians’ wallets, most do not seem to be making conscious decisions about what to do with that money,” said Stephen Popiel, VP at GfK Canada.

The Bank of Montreal recently estimated Canadian drivers could expect to save about $1,500 this year due to lower gas prices.

GfK estimates Canadian drivers are saving about $15-to-$20 per fill up.

“That’s quite a few Starbucks, or almost a case of beer,” Popiel says. “It’s money were aren’t spending.”

Popiel says the survey suggests drivers don’t have a clear plan for how to spend or save the extra funds.

That’s even though the majority believe gas prices will stay low for at least the next year. Among the 951 Canadian drivers surveyed between Jan. 25 and Feb. 1, about 40 per cent expect low gas prices will be around for the next few months and 22 say it could be up to a year.

Economists argue it may be too soon for the impact of low gas prices to show up in consumer spending data.

"Although real household incomes among net consumers have been boosted by the fall in oil prices, this has yet to translate into a surge in spending," Capital Economics global economist Michael Pearce said in a note. "But we still expect consumption in advanced economies to grow rapidly this year."

He forecasts the average price of gas in advanced global economies to be a third lower this year compared to last year.

If the price of Brent crude settle around $60 per barrel, Pearce estimates consumers in the four major advanced economies (the U.S., Eurozone, Japan and the United Kingdom) will save $250 billion (U.S.) annually on fuel. That’s about 1 per cent of their overall consumption.

He says U.S. consumption growth rose to 4.3 per cent on an annualized basis in the fourth quarter.

"And while a full breakdown is not yet available, we suspect that the pick-up in euro-zone growth in the final quarter was partly due to stronger consumer spending," Pearce wrote.

"Overall, we think consumption in the four largest advanced economies will rise by around 2.5 per cent in 2015, which would be its strongest expansion in a decade."

Economists at the Royal Bank also expect lower gas prices to boost consumer spending in Canada, even though it will curb activity in hard-hit, oil-rich provinces affected such as Alberta.

In a recent report, the bank notes that consumer spending accounts for about 54 per cent of Canadian GDP. That compares to business investment at 13 per cent, which is expected to take a hit from spending cuts by oil and gas companies amid the sharp drop in oil prices.

“A small rise in consumer spending can go a long way to offsetting a marked drop in investment,” the report states.

The economists say Canadians spent about $48.5 billion on gas in the first half of 2014. They estimate an 18-per-cent drop in gas prices would save Canadians $8.9 billion in gas.

While a lot of that money isn’t expected to go directly back into the economy, especially given high debt levels and nervousness about the markets and the economy, RBC says even a third of it, or about $2.9 billion, would help boost GDP slightly.

“Importantly, this increase in spending does not require households to take on additional debt,” the economists say. “In fact, the assumptions above actually imply an increase in the share of disposable income that is being saved.”